Friday, August 23, 2013

National Socialization Of Higher Education

Obama's latest bully-pulpit activism is receiving some amount of praise. His plan is to have the government help reduce the costs of higher education. It is propagated as a means of bolstering the so-called "middle class" and helping to increase opportunities in the job market.

The plan makes sense, to a degree. The plan is to back schools that switch from credit-hour programs to those who award based upon examination performance. In other words, a student self-studies and tests out of a class, they get credit for completion. That is something that has already been used with CLEP  and AP testing as well as some real-world experience credits that many colleges award to military veterans based upon their training and work in the actual fields. Most of those credits tend to reside in the lower, introductory-level course.

The plan is labeled a Public-Private Partnership (P3) model. It also seeks to choose favorites. If a school does what Obama says, it gets tax breaks. That, however, fails to acknowledge that the office of the President does not have the power to levy taxes or grant tax breaks. So, it will, instead, reallocate federal education funds to grant greater funding to the schools who obey. That is not a P3 program. A P3 program is where a government function is contracted out to a private industry. The government facilities are leased out to the company, who must comply with the government's standards and the details in the contract. The idea is that the companies can better and more efficiently administrate the function and turn a profit rather than flush away taxpayer money. Mitch Daniels' administration (yes, that included the legislature) was very successful with P3 projects on toll roads as well as with charter schools in Indiana.

Obama's proposals seem more to seek a federal takeover of higher education institutions. That leans more towards national socialization than towards a private-sector growing P3 program. In addition, the federal government cannot offer P3 contracts for state universities, only those universities owned by the federal government (which would include the military academies such as West Point and Annapolis).

Most who laud Obama's proposal fail to see a few key facts. First, most universities are already P3 institutions if not private businesses. Harvard is private. Princeton is private. Texas A&M University is a P3 institution, part funded by the state of Texas, and part funded by taking monies in exchange for goods and services (trade and capitalism). Texas A&M is rather successful. The Texas legislature recently approved a means of helping fund greater expansion. That expansion (new facilities and campuses) would likely have happened without the bill. However, since A&M is considered a "State University", the state has a stake in its growth.

Another issue that proposal fails to recognize is the Tenth Amendment. If one reviews the Constitution, they will find enumerations of authorities and responsibilities of each branch. Article 1 Section 8 enumerates what the legislature can govern. Section 2 enumerates what the president is allowed to do. Funding, directing, mandating, or interfering in education is not among those enumerated powers or authorities. The Tenth Amendment, therefore, applies. It dictates that education is a responsibility left to the states or individual citizens. The federal government has no authority to get involved. It needs to butt-out.

Almost admitting he doesn't have the constitutional authority, while speaking at Knox College, Obama stated that he will circumvent the supreme law of the land and do what he wants.

Two issues facing college students are the rising costs of higher education and the ability to repay student loans. The federal government has long been involved in student loans. They used to guarantee them, acting as a form of cosignatory. Then federally guaranteed student loans were taken out of privately owned banks and put directly under the auspices of the federal government. That was a violation of the tenth amendment. After they did so, however, tuition rates began to rise exponentially. Schools could change more because the government could pay them, even though students are finding it more and more difficult to repay the government. The defaulted loans become public debt. That hurts the economy.

Another key fallacy involved in this proposal is the one of "middle class". Again, every proper citizen should read and understand the US Constitution. That supreme law of the land explicitly states that there are no classes and no titles (or stations) of nobility in this country. Nobody is born into any "class". People are born. They work. They pursue opportunities. They take risks. With hard work and determination, people can become high-income-earners. Those less industrious or frugal may "get by" (rather comfortably on global standards) as middle-income earners. Then there are those who stick themselves in lower or impoverished income brackets. There are some who rise high, make bad choices, risk more than they can afford, and fall. Whatever income bracket you achieve is up to you. Do not fall for the "middle class" fallacy. There is no such thing, despite what despots wish you to believe.

As for increasing job opportunities, those positions need first to be available. Many employers are transitioning full-time positions to part-time ones in order to avoid over-taxation due to the PPACA. Others are facing federal over-regulation that decreases their profit margins to less than 5%. That means they cannot afford to expand or conduct R&D in order to increase their business. That means they cannot afford to create more job openings. In addition, the current economic policies in effect deter would-be entrepreneurs from starting small businesses. Despite the U3 unemployment edging down, very slowly, over the past few months, U6 figures are rising. In addition, the workforce participation rate is at its lowest since before the days of Jimmy Carter.

Jobs that used to require baccalaureate degrees are now taking those with masters degrees, who are working positions far lower than their capabilities. This may falsely lead many to draw the conclusion that higher degrees are more necessary. That is not the case. What is the case is those higher degrees are more marketable in poor and stagnant economic conditions where there is one job position (that requires an associates degree) and 50 people competing for it. The two with experience (some at higher positions) and the masters degree that are willing to take that job to feed their families will be the two considered for the position. They will hate it. It will be beneath their abilities. They will take the jobs because, well, it is better than being unemployed. Many are still paying off student loans, as well.

So, in reality, this program will not generate more jobs. It will just increase competition for those few jobs available. However, by the time the students most affected by the program graduate, the PPACA will be repealed and a more conservative administration will have fixed the economy. The jobs will be available again. Obama will get credit for somebody else having fixed the problems he created or aggravated.

Mr. Obama, since you evidently failed economics by studying only Keynes's failed system, get some education. The best way to reduce the costs of higher education is for the federal government to get out of it. Guaranteeing student loans is one thing. Taking the business out of the private sector was bad. More involvement is not only illegal, it will drive costs up further. Just stop before you aggravate the damage. 

If you have the half-hour to spend listening to the demagogue, here is one of his more recent speeches unveiling the plan: